Diagnosing the High Cost of Health Care:

How Spending on Unnecessary Treatments, Administrative Waste, and Overpriced Drugs Inflates the Cost of Health Care in California

by Elizabeth Ridlington, Frontier Group; Michael Russo, CALPIRG Education Fund

Executive Summary

California spends billions of health care dollars on unnecessary treatments and services, administrative waste, and overpriced, sometimes harmful, medications. Researchers, pundits and health care professionals have suggested possible causes for rising health care costs, from the cost of caring for an aging population to the price of malpractice insurance. These factors play a very small role in the cost of health care, and addressing them would not change the price of care. Nor would imposing “cost containment” or rationing of care be an acceptable solution. Rather, it requires reducing health care spending that fails to improve patient health. This report focuses on three major categories of unproductive spending: overuse of invasive treatments, intensive services, and hospitalization; excessive administrative costs; and prescription drug marketing that encourages the use of more drugs, more expensive drugs, and drugs with a less established record of safety. (June 2008)

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